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Flowers v. Connect, LLC

United States District Court, Eastern District of Pennsylvania

September 24, 2014




Presently before the Court are Plaintiff George G. Flowers’s Motion for Partial Summary Judgment (ECF No. 18) and Defendant Connect LLC’s Cross-Motion for Summary Judgment (ECF No. 21). For the following reasons, Plaintiff’s Motion will be granted in part and denied in part, and Defendant’s Motion will be granted in part and denied in part.


A. Procedural Background

On August 20, 2012, Plaintiff George G. Flowers filed the Complaint for this breach of contract action. (Compl., ECF No. 1.) Jurisdiction is based on 28 U.S.C. § 1332(a) because the parties are diverse and the amount in controversy exceeds $75, 000. (Id. ¶¶ 2-5.) On November 2, 2012, this Court bifurcated the liability and damages portion of Plaintiff’s claims. (ECF No. 14.) On March 5, 2013, Plaintiff’s filed the current Motion for Partial Summary Judgment on liability. (Pl.’s Mot., ECF No. 18.) Defendant Connect LLC, filed a Cross-Motion for Summary Judgment and accompanying Memorandum of Law on March 8, 2013. (Def.’s Mot., ECF No. 21; Def.’s Mem., ECF No. 22.) On April 15, 2013, both Plaintiff and Defendant filed Responses in Opposition to each other’s Motions. (Pl.’s Resp., ECF No. 26; Def.’s Resp., ECF No. 27.)

B. Factual History

Defendant is a limited liability company involved in the business of selling and servicing personal emergency response systems (“PERS”) and related monitoring services. (See Gross Dep. Ex 1., Def.’s Mem. Ex. 3.) A PERS is a wearable base transmitter unit which allows a person, with the push of a button, to speak to an operator who can summon medical help to the person’s home in the event of a medical emergency. (Id.) Most subscribers to Defendant’s service are older adults who are living independently. (Id.) The fees paid by subscribers include a one-time payment for the wearable base transmitter and a recurring monthly payment of $29.99 for the monitoring services. (See id.) Defendant markets its services through direct mail solicitations, internet advertising, local dealers, and “Strategic Alliance Partners.” (See id.) A Strategic Alliance Partner is a large company that offers products to the geriatric customer base targeted by Defendant. (See Gross Dep. I 68, Def.’s Mem. Ex. 1.) These companies partner with Defendant by including promotional material about Defendant’s PERS in their own marketing to geriatric customers. (Id.) Dealers, on the other hand, are generally individuals who sign a standardized “dealer agreement” and are compensated for sales of PERS to end users resulting from the dealer’s direct local marketing and sales efforts. (Def.’s Mem. 6 n.3; Def.’s Ex. 3.)

Plaintiff is an individual who, for twenty-five years, worked for Electric Mobility Company (“EM”)—the company that manufactures, markets, and sells the “Rascal Scooter, ” which is sold to the elderly, disabled, and infirm. (Pl.’s Mot. 2-3; Def.’s Mem. 4.) After retiring from EM in January 2007, Plaintiff founded another company, Platinum Independence, in October 2007.[1] (Flowers Dep. I 48-49, Def.’s Mem. Ex. 6.) Platinum Independence sought to market various types of products to geriatric customers. (Pl.’s Mot. 3; Def.’s Mem. 5.) It was through his work on behalf of Platinum Independence that Plaintiff became acquainted with Defendant’s President, Kenneth S. Gross (“Gross”). (Pl.’s Mot. 4; Def.’s Mem. 6.)

Plaintiff and Gross connected in September 2008, when Plaintiff reached out to Defendant via telephone requesting that Platinum Independence be allowed to sell Defendant’s PERS. (Flowers Dep. I 146-49.) Plaintiff first met with Gross at Defendant’s headquarters, where Plaintiff was given a tour of the facility and offered the possibility of becoming a dealer for Defendant. (Id. at 149.) A second meeting between Plaintiff and Gross occurred sometime in October 2008. (Id. at 155.) At the second meeting, Plaintiff pitched Gross about becoming part of Platinum Independence’s marketing system. (Id.) Defendant did not become a Platinum Independence “member” and no written dealer agreement between Plaintiff and Defendant was executed at either of those meetings. (Flowers Dep. I 165-70; Pl.’s Mot. 4; Def.’s Mem. 6-7.) Plaintiff and Gross met additional times in October 2008. (Flowers Dep. I 172-73, 177-78; Def.’s Mot. 8.) Plaintiff claims that at a subsequent meeting, he and Gross entered into a finders fee agreement under which Plaintiff would find Strategic Alliance Partners for Defendant. (Flowers Decl. ¶¶ 6-7, Pl.’s Mot. Ex. 1.) Plaintiff specifically claims that Gross said “if you can introduce me to [FirstStreet], I will give you $15 a month in recurring revenue to split between you and [FirstStreet].” (Flowers Dep. I 178-79.) Plaintiff allegedly responded, “I’m on it. I’m on it.” (Id. at 179.) According to Plaintiff, Gross orally agreed that Defendant would pay Plaintiff: (1) $15 of the monthly recurring revenue related to each unit sold by a company that Plaintiff introduced to Defendant, minus the amount of monthly recurring revenue paid to the company that makes the sale; or (2) if all $15 of the monthly recurring revenue was committed to the selling company, $10 per unit sold.[2] (Flowers Decl. ¶¶ 6-7; Compl. ¶ 10.) Essentially, Plaintiff claims that if Defendant agreed to pay $15 per unit of the monthly recurring revenue to the company making the sale, then Plaintiff would receive $10 per unit. (Id.) However, if Defendant agreed to pay less than a $15 of monthly recurring revenue to the selling company, for example if $10 went to the selling company, then Plaintiff would receive the difference, in this example $5. Neither party alleges that the agreement was memorialized in writing at the time it was made. (See Flowers Dep. I 179.) Plaintiff assumed that any commission payments that he was entitled to under the agreement would continue forever. (Flowers Dep. I 189.) Both Gross and Flowers agree that the duration of the payments was never discussed. (Gross Dep. I 151; see Flowers Dep. I 189-90.) At some point during all of these events, Defendant also sent Plaintiff a blank copy of Defendant’s “Dealer Agreement.” (Flowers Decl. ¶ 9; Gross Dep. I 136; Flowers I Dep. 196.)

1. Defendant Contracts with FirstStreet and Electric Mobility

After Gross verbally agreed to compensate Plaintiff for an introduction to FirstStreet, Plaintiff made the introduction. (Gross Dep. I 139.)[3] Plaintiff was making a pitch on behalf of Platinum Independence to FirstStreet, and at some point during the pitch, Plaintiff facilitated an introduction between Defendant and FirstStreet by calling Gross and then handing the telephone to Dave Modina (“Modina”), Vice President of Marketing for FirstStreet. (Id. at 128.) At that time, Modina and Gross agreed to set up a meeting. (Id. at 141-43.) The meeting occurred sometime in January or February 2009, at which time Modina and Gross discussed the terms of a deal between Defendant and FirstStreet. (See Id . 144-46.)

Plaintiff also introduced Defendant to his former employer, EM. (Flowers Decl. ¶ 8; Nov. 11 e-mail; see Def.’s Mem. 9.) On November 11, 2008, Gross e-mailed Plaintiff stating

We had a good meeting this afternoon with [EM] . . . They seem interested in doing something with us starting after JAN 1 . . . at this point we are closing the door to any new alliances. . . .
I will honor my commitment to you on EM and First Street should they come to fruition since you did introduce us to both companies, but will not enter into any new agreements past them.
You will earn $10 per unit sold by EM, paid monthly, and the difference between $15 per month and what we finally settle on with FS. If there is no spread on the monthly with FS then you will earn the same $10 per unit sold.

(Nov. 11 e-mail; see Flowers Decl. ¶ 8 & Ex. 1 at 22.)[4] On November 21, Plaintiff responded, “I appreciate your offer to honor our agreement with EM[] and [FirstStreet].” (Pl.’s Resp. Ex. 17.) That same day, Gross replied via e-mail explaining that he had just met with FirstStreet that week and was in the process of reviewing an agreement with them. He further stated,

I am willing to enter into an agreement with you at $10 per unit. This would be an introduction fee only. I do not need help maintaining these relationships once the introduction is made. The larger more sophisticated partners want the full $15 per month. There is no more room to share in recurring.
Let me know if you want to proceed. . . .

(Gross Nov. 21 e-mail, Pl.’s Resp. Ex. 17.)[5] A few days after Gross’s e-mail to Plaintiff, on November 24, 2008, Defendant executed a contract with FirstStreet that was effective December 1, 2008 through May 31, 2009. (FirstStreet Contract 105-120, Flowers Decl. Ex. 6.) Under the terms of the contract, FirstStreet would receive $160 for each unit that it sold, regardless of customer cancellations or returns. (Id. at 106.) In addition, FirstStreet would receive $10 per month for each unit that it sold as long as the customer continued to use and pay the monthly monitoring fee for twelve months following the sale. (Id.) The contract was amended in January 2009 so that FirstStreet would receive $350 for each unit that it sold and $10 per month for each unit that it sold when the customer continued to use the unit for 36 months after the sale. (Id. at 110.) In March 2010, Defendant’s contract with FirstStreet was amended again. This time FirstStreet would receive $380 for each unit that it sold minus a percentage for initial cancellations. (FirstStreet Contract 118.) Defendant and FirstStreet’s business relationship terminated on April 30, 2012. (Gross Dep. I 68.) Plaintiff claims that he did not see the contract or addendums between Defendant and FirstStreet until after this litigation commenced. (Flowers Dep. I 197.)

In early 2009, EM became one of Defendant’s Strategic Alliance Partners, entering into a contract for three years. (Flowers Dep. II 141, Def.’s Mem Ex. 7; Pl.’s Ex. 6 at 92.) Defendant agreed to pay EM $15 of the monthly recurring revenue. (Flowers Decl. ¶ 8 & Pl.’s Ex. 6 at 89, 95.) Defendant and EM’s business relationship terminated on December 15, 2010. (Pl.’s Ex. 6 at 101.)

On February 5, 2009, Plaintiff wrote to Gross expressing his happiness that FirstStreet and EM had started promoting and selling Defendant’s product. (Feb. 5 Ltr., Def.’s Mem. Ex. 12.) He noted that he understood that FirstStreet had sold several hundred units since December 2008, and he included this information to facilitate payments that Defendant owed him for sales that had already occurred. (Id.) Plaintiff also expressed his interest in “promoting [Defendant] to [his] other contacts with some other type of agreement with [Defendant] or becoming a special dealer” as previously discussed. (Id.) On February 24, 2009, Plaintiff e-mailed Gross a version of Defendant’s standard “Dealer Agreement” that had been modified by Plaintiff. (Def.’s Mem. Ex. 9.) The marked-up Dealer Agreement was never executed. (Flowers Decl. ¶ 10; Gross Dep. I 111-12.)

On March 5, 2009, Gross forwarded Plaintiff an e-mail with information on the success of FirstStreet’s sales of Defendant’s product. (March 5 e-mail, Def.’s Mem. Ex. 5.) Gross specifically stated that if Plaintiff “brought in 5 more like this one . . . [he] would never have to work again!!” (Id.) On March 18, 2009, Plaintiff sent Gross an e-mail indicating that he had acted as a representative of Defendant at a trade show, which Gross had allegedly approved, and in doing so had found some opportunities. (March 18 e-mail, Flowers Decl. Ex. 1 at 27.) Plaintiff specifically stated that “Dr. Leonards [sic] is in my sights also!!” (Id.) Gross testified that around this timeā€”from March 5th to ...

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